A simple way to ensure government budgets are fair for all generations

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While inflation forces Canadians to focus on household budgets, it’s also important to pay close attention to government spending and its influence on our personal finances.

At their heart, government budgets reflect how much different groups and issues are prioritized. This should worry Canadian retirees, because government is valuing their needs more than leaving a proud legacy for their kids and grandchildren. Federal and provincial budgets regularly allocate the bulk of new spending to those over age 65, often without collecting enough revenue to pay those bills. Fixing this discrepancy will require retirees to join in solidarity with their offspring to demand that budgets account wisely for all generations – starting with the expectation that governments better report how their annual investments benefit different age groups.

The most recent federal Fall Economic Statement is instructive: Elderly benefits – also known as Old Age Security (OAS), which includes a guaranteed income for most seniors – are set to rise from $69-billion in 2022/23 to $96.6-billion in 2027/28. This $27.6-billion increase is massive compared with other budget expenditures. It is equal to the total amount that Ottawa will spend on Employment Insurance, and nearly as much as the $30-billion it will pay in total for the Canada Child Benefit. Prime Minister Justin Trudeau has said the federal government’s efforts to cut average child-care costs to $10 a day will require a “historic” annual investment for families with kids, set at $7.7-billion for 2027/28 – but this is small compared with spending increases for retirement income.

Ottawa is not alone in struggling to account fairly for young and old alike. The Ontario budget on which Premier Doug Ford campaigned last spring allocated approximately $500 in new provincial funding for every resident over age 65, compared with just $100 per person under age 45. Similarly, British Columbia government’s most recent budget allocated an extra $750 in new funding for every resident over age 65, with no significant increase for those under age 45.

In both provinces, medical spending for older residents drove this trend, because governments spend three to 10 times more on care for retirees compared with residents in their 20s and 30s. In an era when governments are hesitant to raise taxes for fear of losing elections, medical spending for retirees risks crowding out investments in postsecondary or housing that often matter more for their kids and grandchildren.

The big increase to OAS spending did not receive a mention in the federal government’s main media release when first forecasted in last year’s budget. Nor did provincial media releases highlight that medical-care spending received as much, or more, new money than education and social services combined. When briefing materials omit such information, major news outlets often overlook what former senior economic adviser to prime minister Stephen Harper, Sean Speer, describes as “the politics of gerontocracy” in government budgeting – or what the C.D. Howe Institute describes as the impact of the “boomer bulge.”

Most commentary ignores the uneven way that federal and provincial budgets impact finances for younger and older residents, despite the very real implications for their household finances. Young people typically suffer higher student and child-care debts that compound higher costs of rent and home ownership, while older Canadians report the most wealth, lowest levels of poverty and often benefit from rising housing prices.

Perhaps governments are finding the right balance with their current allocations between age groups – but perhaps they aren’t. We won’t know so long as governments obfuscate age trends in the small-print of their budgets, robbing the electorate of the chance to debate the merits of these generational trade-offs.

To fix this problem, there is a template for provinces and Ottawa to follow. The Trudeau government added gender-based analysis, or GBA, to its annual budget process – even including some narrowly focused age information to the GBA framework. But this age analysis remains fundamentally flawed because it omits almost all of the growth in OAS spending. This exclusion must be corrected.

The weeks ahead mark the last for causes, companies and cities to influence the budgets that governments will table this spring. If you are a retiree who cares about the financial legacy you leave your offspring, there’s no time to lose. Join forces with your adult kids to call on governments to report adequately on age trends in their annual budgets, and to appoint ministers, deputy ministers or other high-ranking officials for generational fairness. It’s much more likely that the financial well-being of younger Canadians will be addressed as urgently as other age groups if such measures are taken.

Dr. Paul Kershaw is a policy professor at UBC and founder of Generation Squeeze, Canada’s leading voice for generational fairness. You can follow Gen Squeeze on Twitter, Facebook, Instagram, and subscribe to Paul’s Hard Truths podcast and videos.